(By Paul Weyland) What amazes me is how important the collections process is to people in our industry, and yet we spend very little time discussing better strategies for handling delinquent accounts. Here is a good rule to live by: “It’s not a sale until it’s collected.” Boom! There you go.
Write it on the wall where you can see it every day. Because whether you’re paid on billing or collection, ultimately you’re paid on collection — because if you’re paid on billing and then you don’t collect, the station will eventually take back the money they paid you on your billing. Collections is a fundamental part of the selling process, and the better you are at it, the more you’ll personally benefit by knowing how to do it properly.
For many of us in media sales, collections are typically the part of the job we like the least. I mean, after all, who likes chasing people for money? I’ll tell you who: me. Because if I go to all of that trouble to prospect, present, and close an account, and then service that account, I feel I have the right to be paid for the work I have done.
Luckily, I’ve always worked at stations that took collections very seriously. At one station, not only did we discuss outstanding bills in our one-on-ones, we also had those conversations in our weekly meetings, with the entire sales and management staff present. (I always thought it was a psychological trick, humiliating the salesperson with the collections problem in front of everyone else in the room.)
We even assigned numbers to some of the most frequent client excuses. “The client says he never got our invoice,” might be Excuse No. 44. “The client says his wife has to sign the check and she’s out of town with her sick mother.” “Ah, the ‘sick mother’ — Excuse No. 27.”
Sometimes dealing with collections can make you sad and empathetic for the customer. And sometimes the customer is just a sleazebag and you should have seen this coming to begin with. Kind of like that guy who asked me if he could borrow $1,000. And I told him, “But Mike, you’re a notorious gambler. How do I know that if I loan you the money, you won’t just go waste it all on the blackjack table?” and he said, “No, Paul, that won’t happen. See, I’ve got gambling money.”
Like any other aspect of sales, becoming a good collector involves its own set of skills and knowledge. Here are some tips to help you get the client to pay your bill so you can get paid what’s rightfully yours.
Ask for cash in advance or a credit card to begin with.
We’re in the radio and TV business, not the banking business. Why must we finance the client’s advertising schedule? Would it hurt to ask for cash in advance? I’m already used to paying that way as a consumer. I pay for gasoline in advance of getting it. Movies, same way. Food to go? Cash
in advance. Home security? My new service now asks for a year’s payments in advance. And in exchange, I get a discount. When a home is sold, the new owner doesn’t get the keys and the garage door opener until the money has been transferred to the previous owner.
When I’m selling broadcast advertising to a new local direct client, I’ll use the assumptive close and say, “Before we start, when would be a good time to pick up a check?” Or, if your company takes credit cards, “Why not just put this on the card? You can use our automatic payment system and the money will be drafted out of your account. And that way, you’ll get the points on your card.” Having to collect money from slippery clients can eat up a huge amount of your valuable time. Why not play it safe and nip that potential collections problem in the bud by asking for cash in advance or automatic payment on credit cards in every single case?
Don’t be naive. Understand what you’re up against. If the client owes you money, how many other vendors is he also having trouble with? Fifteen? Maybe even more? The expression “The squeaky wheel gets the grease” has never fit better than it does in a collections problem. Time to start squeaking. Loud. A lot.
Make it personal. No more “nice guy.” When somebody is delinquent, it’s time to get tough. Remind the client that you have bills to pay, children to feed and clothe, etc., etc., and that you were depending on this money.
Within 24 hours… when to go into collection procedures. The moment you suspect you have the problem. The minute you get that tingly feeling something’s not right, it’s time to get to work. Start collections proceedings within 24 hours of discovering you might have a problem. The longer you wait, the colder the trail becomes.
Knowing for sure that you have a problem. You know for a fact that your invoice was sent to your client, either by regular mail or nowadays, by email or text. When a client is late with payment, occasionally I make a call and say, “We sent out invoices last month and we might have had a problem with the Post Office. Did you get your invoice?” If the client says no, then you know you’ve got a problem. Offer to bring over another invoice by saying, “When would be a good time for me to hand-deliver or FedEx a copy of the invoice?”
Be clear up front on when you expect to be paid. When the client says, “Yes, we’ll advertise with you,” then I say, “Great. Here’s how we work.” Then I talk about commercial production and deadlines and I explain that payment is due right now or within 30 days. It’s a good idea to reach an agreement early on payment. I include payment due dates in my signed client agreements so that there can be no confusion.
Be prepared to negotiate payment terms. If they can’t pay 100 percent of what they owe today, how much could they pay? Eighty-five percent? Seventy-five percent? Fifty percent? Work out a payment schedule. You sign it, have the client sign it, and stick to that schedule.
Categories that should always be cash in advance. As much as I hate generalizing, these categories are generally notoriously bad about paying media companies.
Promotional — concerts and events companies
Used car lots
What’s the client’s cell phone number? Getting a new client’s cell number is something you do without having to think about it, for a variety of reasons. But in collections, it is imperative. Typically, clients that owe you money will not call back when you leave phone messages. They won’t answer your texts or e-mails. But when you have their cell phone number, you can call them from any other phone that doesn’t identify you. They usually have to answer the call because you could be a new customer, a friend, or a family member.
Cash, check, or credit card. It doesn’t matter when you’re dealing with a delinquent account. Offer to take a credit or debit card. Offer to take post-dated checks if that’s OK with your company. Never refuse cash. You could write a cash receipt on the spot. You and the client sign, acknowledging that X amount was paid, with X amount remaining.
Keep good records. Write down everything that was said or done involving this account and their collection issue. Don’t leave anything up to memory. “At 2:15 p.m. last Wednesday you said the check would be ready for me to pick up today by noon. That’s what you said, and that’s why I’m here right now.”
Remain vigilant. Don’t let your guard down, even for a day. Don’t allow too much time to slip by between calls. Every time you think you’re being too hard on the client, another vendor, more persistent than you, is getting paid the very money that could have gone to you instead. Get to the mental position where you consider yourself an expert at getting paid what you are owed. Instead of hating that part of the job, start looking at it as an important and necessary part of doing business.
Always be prepared for bizarre excuses. Here’s one. One of our salespeople who had a collections problem with an account that was more than 120 days past due suddenly heard that same client advertising on a competitive station. When the salesperson confronted the owner of the business, the guy said, “But Ron, if I had the money, I wouldn’t have to advertise.” Hmm, let that one sink in for a minute. By the way, that’s now Excuse No. 268.
Paul Weyland helps broadcast stations sell more longterm local direct business. Reach him at paulweyland.com or call 512.236.1222.